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Free Writing Prospectus
(To the Prospectus dated
August 31, 2010, the
Prospectus Supplement dated May 27, 2011, and the
Product Supplement ARN-1 dated May 27, 2011)
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Filed Pursuant to Rule 433
Registration No. 333-169119
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Subject to Completion
Preliminary Term Sheet dated January 4, 2013
The notes are being issued by Barclays Bank PLC (“Barclays”). There are important differences between the notes and
a conventional debt security, including different investment risks. See “Risk Factors” and “Additional Risk Factors” beginning on page TS-6 of this term sheet and “Risk Factors” beginning on page S-10 of product
supplement ARN-1.
None of the Securities and Exchange Commission (the “SEC”), any state securities commission, or any other regulatory
body has approved or disapproved of these securities or determined if this Note Prospectus (as defined below) is truthful or complete. Any representation to the contrary is a criminal offense.
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Per Unit
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Total
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Public offering price
(1) (2)
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$10.00
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$
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Underwriting discount
(1) (2)
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$0.20
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$
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Proceeds, before expenses, to Barclays
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$9.80
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$
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(1)
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For any purchase of 500,000 units or
more in a single transaction by an individual investor, the public offering price and the underwriting discount will be $9.95 per unit and $0.15 per unit, respectively.
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(2)
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For any purchase by certain fee-based
trusts and discretionary accounts managed by U.S. Trust operating through Bank of America, N.A., the public offering price and underwriting discount will be $9.80 per unit and $0.00 per unit, respectively.
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The notes:
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Are Not FDIC Insured
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Are Not Bank Guaranteed
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May Lose Value
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Merrill Lynch & Co.
January , 2013
Units
$10 principal amount per unit
CUSIP No.
Pricing Date*
January , 2013
Settlement Date*
February , 2013
Maturity Date*
March , 2014
*Subject to change based on the actual date the notes are priced for initial sale to the public (the “pricing date”)
Accelerated Return Notes® Linked to the
NYSE Arca Gold Miners Index
Maturity of approximately 14 months
3-to-1 upside exposure to increases in the Index, subject to a capped return of [26% to 30%]
1-to-1 downside exposure to decreases in the Index, with 100% of your investment at risk
All payments occur at maturity and are subject to the credit risk of Barclays Bank PLC
No periodic interest payments
Limited secondary market liquidity, with no exchange listing
The
notes are senior unsecured debt securities and are not deposit liabilities of Barclays Bank PLC. The notes are not insured by the US Federal Deposit Insurance Corporation or any other governmental agency of the United States, the United Kingdom, or
any other jurisdiction.
BARCLAYS Enhanced Return
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Summary
The Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March
, 2014 (the “notes”) are our senior unsecured debt securities. The notes are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other governmental agency of the United States, the United
Kingdom or any other jurisdiction or secured by collateral.
The notes will rank equally with all of our other unsecured and unsubordinated debt. Any payments due on the notes, including any repayment of principal, will be subject to the credit
risk of Barclays.
The notes provide you a leveraged return, subject to a cap, if the Ending Value (as determined below) of the NYSE Arca Gold Miners Index (the “Index”) is greater than the Starting Value. If the Ending Value is less
than the Starting Value, you will lose all or a portion of the principal amount of your notes.
The terms and risks of the notes are contained in this
term sheet and the documents listed below (together, the “Note Prospectus”). The documents have been filed as part of a registration statement with the SEC, which may, without cost, be accessed on the SEC website as indicated below or
obtained from MLPF&S by calling 1-866-500-5408:
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§
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Product supplement ARN-1 dated May 27, 2011:
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http://www.sec.gov/Archives/edgar/data/312070/000119312511153078/d424b3.htm
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§
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Series A MTN prospectus supplement dated May 27, 2011:
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http://www.sec.gov/Archives/edgar/data/312070/000119312511152766/d424b3.htm
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§
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Prospectus dated August 31, 2010:
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http://www.sec.gov/Archives/edgar/data/312070/000119312510201448/df3asr.htm
Before you invest, you should read the Note Prospectus, including this term sheet, for information about us and this offering. Any prior or contemporaneous oral
statements and any other written materials you may have received are superseded by the Note Prospectus. Capitalized terms used but not defined in this term sheet have the meanings set forth in product supplement ARN-1. Unless otherwise indicated or
unless the context requires otherwise, all references in this document to “we,” “us,” “our,” or similar references are to Barclays.
Terms of the Notes
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Issuer:
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Barclays Bank PLC (“Barclays”)
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Original Offering Price:
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$10.00 per unit
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Term:
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Approximately 14 months
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Market Measure:
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NYSE Arca Gold Miners Index (Bloomberg symbol: “GDM”), a price return index.
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Starting Value:
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The closing level of the Market Measure on the pricing date.
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Ending Value:
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The average of the closing levels of the Market Measure on each scheduled calculation day occurring during
the maturity valuation period. The calculation days are subject to postponement in the event of Market Disruption Events, as described on page S-24 of product supplement ARN-1.
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Capped Value:
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[$12.10 to $12.50] per unit of the notes, which represents a return of [21% to 25%] over the Original
Offering Price. The actual Capped Value will be determined on the pricing date.
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Maturity Valuation Period:
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Five scheduled calculation days shortly before the maturity date
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Participation Rate:
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300%
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Calculation Agent:
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Barclays and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”).
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Fees Charged:
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The public offering price of the notes includes the underwriting discount of $0.20 per unit as listed on
the cover page and an additional charge of $0.075 per unit more fully described on page TS-11.
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Redemption Amount Determination
On the maturity date, you will receive a cash payment per unit determined as follows:
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Accelerated Return Notes
®
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TS-2
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Investor Considerations
You may wish to consider an investment in the notes if:
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You anticipate that the Index will increase moderately from the Starting Value to the Ending Value.
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§
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You are willing to risk a loss of principal and return if the Index decreases from the Starting Value to the Ending Value.
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§
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You accept that the return on the notes, if any, will be capped.
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§
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You are willing to forgo the interest payments that are paid on traditional interest bearing debt securities.
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§
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You are willing to forgo dividends or other benefits of owning the stocks included in the Index.
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§
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You are willing to accept a limited market for sales prior to maturity, and understand that the market prices for the notes, if any, will be affected by various
factors, including our actual and perceived creditworthiness, and the fees charged on the notes, as described on page TS-2.
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§
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You are willing to assume our credit risk, as issuer of the notes, for all payments under the notes, including the Redemption Amount.
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The notes may not be an appropriate investment for you if:
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You believe that the Index will decrease from the Starting Value or that it will not increase sufficiently over the term of the notes to provide you with your
desired return.
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§
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You seek principal protection or preservation of capital.
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§
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You seek an uncapped return on your investment.
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§
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You seek interest payments or other current income on your investment.
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§
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You want to receive dividends or other distributions paid on the stocks included in the Index.
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§
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You seek an investment for which there will be a liquid secondary market.
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§
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You are unwilling or are unable to take market risk on the notes or to take our credit risk as issuer of the notes.
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We urge you to consult your investment, legal,
tax, accounting, and other advisors before you invest in the notes.
Hypothetical Payout Profile
The below graph is based on
hypothetical
numbers and values.
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Accelerated Return Notes
®
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This
graph reflects the returns on the notes, based on the Participation Rate of 300% and a Capped Value of $12.30, the midpoint of the Capped Value range of [$12.10 to $12.50]. The green line reflects the returns on the notes, while the dotted gray line
reflects the returns of a direct investment in the stocks included in the Index, excluding dividends.
This graph has been prepared for purposes of illustration only.
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Accelerated Return Notes
®
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TS-3
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Hypothetical Payments at Maturity
The following table and examples are for purposes of illustration only. They are based on
hypothetical
values and show
hypothetical
returns on the notes.
The actual amount you receive and the
resulting total rate of return will depend on the actual Starting Value, Ending Value, Capped Value, and term of your investment.
The following
table is based on a Starting Value of 100, the Participation Rate of 300%, and a Capped Value of $12.30 per unit. It illustrates the effect of a range of Ending Values on the Redemption Amount per unit of the notes and the total rate of return to
holders of the notes. The following examples do not take into account any tax consequences from investing in the notes.
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Ending Value
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Percentage Change from
the Starting
Value to the
Ending Value
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Redemption
Amount per Unit
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Total Rate
of Return on
the Notes
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60.00
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-40.00
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%
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$6.00
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-40.00
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%
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70.00
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-30.00
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%
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$7.00
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-30.00
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%
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80.00
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-20.00
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%
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$8.00
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-20.00
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%
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90.00
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-10.00
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%
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$9.00
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-10.00
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%
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94.00
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-6.00
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%
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$9.40
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-6.00
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%
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97.00
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-3.00
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%
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$9.70
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-3.00
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%
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100.00
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(1)
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0.00
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%
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$10.00
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0.00
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%
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105.00
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5.00
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%
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$11.50
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15.00
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%
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107.00
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7.00
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%
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$12.10
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21.00
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%
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110.00
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10.00
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%
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$12.30
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(2)
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23.00
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%
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120.00
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20.00
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%
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$12.30
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23.00
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%
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130.00
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30.00
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%
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$12.30
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23.00
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%
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140.00
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40.00
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%
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$12.30
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23.00
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%
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150.00
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50.00
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%
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$12.30
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23.00
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%
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160.00
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60.00
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%
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$12.30
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23.00
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%
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(1)
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The
hypothetical
Starting Value
of 100 used in these examples has been chosen for illustrative purposes only, and does not represent a likely actual Starting Value for the Market Measure.
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(2)
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The Redemption Amount per unit cannot
exceed the
hypothetical
Capped Value.
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For recent actual levels of the Market Measure, see “The Index” section below.
The Index is a price return index and as such the Ending Value will not include any income generated by dividends paid on the stocks included in the Index, which you would otherwise be entitled to receive if you invested in those stocks directly. In
addition, all payments on the notes are subject to issuer credit risk.
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Accelerated Return Notes
®
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TS-4
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Redemption Amount Calculation Examples
Example 1
The Ending Value is 80.00, or 80.00% of the Starting Value:
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Starting Value:
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100.00
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Ending Value:
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80.00
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$10 ×
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(
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80
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)
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= $8.00
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Redemption Amount per unit
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100
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Example 2
The Ending Value
is 105.00, or 105.00% of the Starting Value:
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Starting Value:
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100.00
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Ending Value:
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105.00
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$10 +
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[
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$10 × 300% ×
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(
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105 – 100
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)
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]
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= $11.50
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Redemption Amount per unit
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100
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Example 3
The Ending Value
is 130.00, or 130.00% of the Starting Value:
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Starting Value:
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100.00
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Ending Value:
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130.00
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$10 +
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[
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$10 × 300% ×
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(
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130 – 100
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)
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]
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= $19.00, however, because the Redemption Amount for the notes cannot exceed the Capped Value, the Redemption Amount will be $12.30 per unit
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100
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Accelerated Return Notes
®
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TS-5
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Risk Factors
There are important differences between the notes and a conventional debt security. An investment in the notes involves significant risks, including those listed below. You should carefully review the more
detailed explanation of risks relating to the notes in the “Risk Factors” sections beginning on page S-10 of product supplement ARN-1 and page S-6 of the Series A MTN prospectus supplement identified above under “Summary.” We
also urge you to consult your investment, legal, tax, accounting, and other advisors before you invest in the notes.
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§
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Depending on the performance of the Index as measured shortly before the maturity date, your investment may result in a loss; there is no guaranteed return of
principal.
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§
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Your yield may be less than the yield you could earn by owning a conventional debt security of comparable maturity.
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§
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Payments on the notes are subject to our credit risk, and actual or perceived changes in our creditworthiness are expected to affect the value of the notes. If
we become insolvent or are unable to pay our obligations, you may lose your entire investment.
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§
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Your investment return, if any, is limited to the return represented by the Capped Value and may be less than a comparable investment directly in the stocks
included in the Index.
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§
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If you attempt to sell the notes prior to maturity, their market value may be lower than the price you paid for the notes due to, among other things, the
inclusion of fees charged for developing, hedging and distributing the notes, as described on page TS-11 and various credit, market and economic factors that interrelate in complex and unpredictable ways.
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§
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A trading market is not expected to develop for the notes. We, MLPF&S and our respective affiliates are not obligated to make a market for, or to repurchase,
the notes.
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§
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Your return on the notes and the value of the notes may be affected by exchange rate movements and factors affecting the international securities markets.
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§
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Our business, hedging and trading activities, and those of MLPF&S and our respective affiliates (including trading in shares of companies included in the
Index), and any hedging and trading activities we, MLPF&S or our respective affiliates engage in for our clients’ accounts, may affect the market value and return of the notes and may create conflicts of interest with you.
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§
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The Index sponsor may adjust the Index in a way that affects its level, and has no obligation to consider your interests.
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§
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You will have no rights of a holder of the securities represented by the Index, and you will not be entitled to receive securities or dividends or other
distributions by the issuers of those securities.
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§
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While we, MLPF&S or our respective affiliates may from time to time own shares of companies included in the Index, we, MLPF&S and our respective
affiliates do not control any company included in the Index, and are not responsible for any disclosure made by any other company.
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§
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There may be potential conflicts of interest involving the calculation agent. We have the right to appoint and remove the calculation agent.
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§
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The U.S. federal income tax consequences of the notes are uncertain, and may be adverse to a holder of the notes. See “Material U.S. Federal Income Tax
Consequences” below and “U.S. Federal Income Tax Summary” beginning on page S-35 of product supplement ARN-1.
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Accelerated Return Notes
®
|
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TS-6
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Accelerated Return Notes
®
Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Additional Risk Factors
All of the securities included in the Index are concentrated in one industry.
All of the securities included
in the Index are issued by companies in the gold and silver mining industry. As a result, the securities that will determine the performance of the notes are concentrated in one industry. Although an investment in the notes will not give holders any
ownership or other direct interests in the securities included in the Index, the return on an investment in the notes will be subject to certain risks similar to those associated with direct equity investments in the gold and silver mining industry.
Accordingly, by investing in the notes, you will not benefit from the diversification which could result from an investment linked to companies that operate in multiple sectors.
A limited number of Index Components may affect its level and the Index is not necessarily representative of the gold and silver mining industry.
As of December 31, 2012 the top three Index Components constituted 30.39% of the total weight of the Index and the top seven Index Components constituted 50.28% of the total weight of the Index. Any reduction
in the market price of those securities is likely to have a substantial adverse impact on the level of the Index and the value of the notes.
While the
securities included in the Index are common stocks and American Depositary Receipts (“ADRs”) of companies generally considered to be involved in various segments of the gold and silver mining industry, the securities included in the Index
may not follow the price movements of the entire gold and silver mining industry generally. If the securities included in the Index decline in value, the Index will decline in value even if security prices in the gold and silver mining industry
generally increase in value.
There is no direct correlation between the value of the notes or the level of the Index, on the one hand, and gold and
silver prices, on the other hand.
Although the price of gold or silver is one factor that may influence the performance of the securities underlying
the Index, the notes are not linked to the gold or silver spot prices or to gold or silver futures. There is no direct linkage between the level of the Index and the prices of gold and silver. While gold and silver prices may be one factor that
could affect the prices of the securities included in the Index and, consequently, the level of the Index, the notes and the Redemption Amount are not directly linked to the movement of gold and silver prices and may be affected by factors unrelated
to those movements. Investing in the notes is not the same as investing in gold or silver, and you should not invest in the notes if you wish to invest in a product that is linked directly to the price of gold or silver.
NYSE Arca, Inc. (“NYSE Arca”) the sponsor and compiler of the Index, retains significant control and discretionary decision-making over the Index and
is responsible for decisions regarding the interpretation of and amendments to the Index rules, which may have an adverse effect on the level of the Index, the market value of the notes and the Redemption Amount on the maturity date.
NYSE Arca is the compiler of the Index and, as such, is responsible for the day-to-day management of the Index and for decisions regarding the interpretation of the
rules governing the Index. NYSE Arca has the discretion to make operational adjustments to the Index and to the Index components, including discretion to exclude companies that otherwise meet the minimum criteria for inclusion in the Index. In
addition, NYSE Arca retains the power to supplement, amend in whole or in part, revise or withdraw the Index rules at any time, any of which may lead to changes in the way the Index is compiled or calculated or adversely affect the Index in another
way. Any of these adjustments to the Index or the Index rules may adversely affect the level of the Index, the market value of the notes and the Redemption Amount on the maturity date. The Index sponsor has no obligation to take the needs of any
buyer, seller or holder of the notes into consideration at any time.
The performance of the securities underlying the Index may be influenced by
gold and silver prices.
To the extent the price of gold or silver has a limited effect, if any, on the prices of the securities included in the
Index, gold prices and silver prices are subject to volatile price movements over short periods of time, represent trading in commodities markets, which are substantially different from equities markets, and are affected by numerous factors. These
include economic factors, including the structure of and confidence in the global monetary system, expectations of the future rate of inflation, the relative strength of, and confidence in, the U.S. dollar (the currency in which the prices of gold
and silver are generally quoted), interest rates and gold and silver borrowing and lending rates, and global or regional economic, financial, political, regulatory, judicial, or other events.
Gold prices and silver prices may also be affected by industry factors such as industrial and jewelry demand, lending, sales and purchases of gold and silver by the official sector, including central banks and
other governmental agencies and multilateral institutions which hold gold and silver, levels of gold and silver production and production costs, and short-term changes in supply and demand because of trading activities in the gold and silver
markets. It is not possible to predict the aggregate effects of all or any combination of these factors.
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Accelerated Return Notes
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TS-7
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Accelerated Return Notes
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Linked to the NYSE Arca Gold Miners Index, due March , 2014
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The Index
All disclosures contained in this term sheet regarding the Index, including, without limitation, its make up, method of calculation, and changes in its components, have been derived from publicly available sources,
including http://www.nyse.com/about/listed/lcddata.html?ticker=GDM and http://indices.nyx.com/sites/indices.nyx.com/files/gdm_rule_book_v1.1.pdf.
We
are not incorporating by reference these websites or any material included on those websites in this term sheet. The information reflects the policies of, and is subject to change by, NYSE Arca, the sponsor of the Index. NYSE Arca, which owns the
copyright and all other rights to the Index, has no obligation to continue to publish, and may discontinue publication of, the Index. The consequences of NYSE Arca discontinuing publication of the Index are discussed in the section entitled
“Description of ARNs - Discontinuance of a Market Measure” beginning on page S-29 of product supplement ARN-1. None of us, the calculation agent, or MLPF&S accepts any responsibility for the calculation, maintenance, or publication of
the Index or any successor index.
The Index is a modified market capitalization weighted index comprised of securities issued by publicly traded
companies involved primarily in the mining of gold or silver. The Index was initially launched and published in October 2004.
Eligibility Criteria
for Index Components
The Index includes common stocks or ADRs of selected companies that are involved in mining for gold and silver and that are
listed for trading on the New York Stock Exchange, the NYSE Amex Stock Exchange or quoted on the NASDAQ Global Market. Only companies with a market capitalization of greater than $100 million that have an average daily trading volume of at least
50,000 shares or ADRs over the past six months are eligible for inclusion in the Index. NYSE Arca has the discretion to not include all companies that meet the minimum criteria for inclusion.
Calculation of the Index
The Index is calculated by NYSE Arca on a price return basis. The calculation is
based on the current modified market capitalization divided by a divisor. The divisor was determined on the initial capitalization base of the Index and the base level and may be adjusted as a result of corporate actions and composition changes, as
described below. The level of the Index was set at 500.00 on December 20, 2002. which is the index base date. The Index is calculated using the following formula:
Where:
t = day of calculation;
N = number of constituent equities in the Index;
Qi,t =
number of shares of equity i on day t;
Mi,t = multiplier of equity i;
Ci,t = price of equity i on day t; and
DIV = current index divisor on day t.
Index Maintenance
The Index is reviewed quarterly to ensure
that at least 90% of the Index weight is accounted for by Index components that continue to meet the initial eligibility requirements. NYSE Arca may at any time and from time to time change the number of securities comprising the group by adding or
deleting one or more securities, or replacing one or more securities contained in the group with one or more substitute securities of its choice, if in NYSE Arca’s discretion such addition, deletion or substitution is necessary or appropriate
to maintain the quality and/or character of the Index. Components will be removed from the Index during the quarterly review if the market capitalization falls below $50 million or the traded average daily shares for the previous six months is lower
than 25,000 shares.
At the time of the quarterly rebalance, the component security weights (also referred to as the multiplier or share weight of each
component security) will be modified to conform to the following asset diversification requirements:
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(1)
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the weight of any single component security may not account for more than 20% of the total value of the Index;
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(2)
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the component securities are split into two subgroups–large and small, which are ranked by market capitalization weight in the Index. Large securities are defined as having
a starting Index weight greater than or equal to 5%. Small securities are defined as having a starting Index weight below 5%; and
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(3)
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the aggregate weight of those component securities which individually represent more than 4.5% of the total value of the Index may not account for more than 50% of the total
Index value.
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The weights of the components securities (taking into account expected component changes and share adjustments) are modified
in accordance with the Index’s diversification rules.
Diversification Rule 1:
If any component stock exceeds 20% of the total value of the
Index, then all stocks greater than 20% of the Index are reduced to represent 20% of the value of the Index. The aggregate amount by which all component stocks are reduced is redistributed proportionately across the remaining stocks that represent
less than 20% of the Index value. After this redistribution, if any other stock then exceeds 20%, the stock is set to 20% of the Index value and the redistribution is repeated.
Diversification Rule 2:
The components are sorted into two groups, large are components with a starting index weight of 5% or greater and small are those that are under 5% (after any adjustments for
Diversification Rule 1). Each group in aggregate will represent 50% of the final
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Accelerated Return Notes
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TS-8
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Accelerated Return Notes
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Linked to the NYSE Arca Gold Miners Index, due March , 2014
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index weight. The weight of each of the large stocks will be scaled down proportionately (with a floor of 5%) so that the aggregate weight of the large components will be reduced to represent 50%
of the Index. If any large component stock falls below a weight equal to the product of 5% and the proportion by which the stocks were scaled down following this distribution, then the weight of the stock is set equal to 5% and the components with
weights greater than 5% will be reduced proportionately. The weight of each of the small components will be scaled up proportionately from the redistribution of the large components. If any small component stock exceeds a weight equal to the product
of 4.5% and the proportion by which the stocks were scaled down following this distribution, then the weight of the stock is set equal to 4.5%. The redistribution of weight to the remaining stocks is repeated until the entire amount has been
redistributed.
Changes to the Index composition and/or the component security weights in the Index are determined and announced prior to taking effect,
which typically occurs after the close of trading on the third Friday of each calendar quarter month in connection with the quarterly Index rebalance. The share weight of each component security in the Index portfolio remains fixed between quarterly
reviews except in the event of certain types of corporate actions such as stock splits, reverse stock splits, stock dividends, or similar events. The share weights used in the Index calculation are not typically adjusted for shares issued or
repurchased between quarterly reviews. However, in the event of a merger between two components, the share weight of the surviving entity may be adjusted to account for any stock issued in the acquisition. NYSE Arca may substitute securities or
change the number of securities included in the Index, based on changing conditions in the industry or in the event of certain types of corporate actions, including mergers, acquisitions, spin-offs, and reorganizations. In the event of component or
share weight changes to the Index portfolio, the payment of dividends other than ordinary cash dividends, spin-offs, rights offerings, re-capitalization, or other corporate actions affecting a component security of the Index, the Index divisor may
be adjusted to ensure that there are no changes to the Index level as a result of nonmarket forces.
Index Weight of Each Index Component
As of December 31, 2012, the Index included 29 companies. The following table presents the Index weight for each of the Index components as of
that date.
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Company
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Percentage of Index Weighting (%)*
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Barrick Gold Corporation
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12.08
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Goldcorp Inc.
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10.33
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Newmont Mining Corporation
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7.98
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AngloGold Ashanti Limited
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5.21
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Kinross Gold Corporation
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4.94
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Yamana Gold Inc.
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4.91
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Silver Wheaton Corp.
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4.83
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Gold Fields Limited
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4.77
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Cia de Minas Buenaventura SA
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4.62
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Randgold Resources Limited
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4.45
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Agnico-Eagle Mines Limited
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4.38
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Eldorado Gold Corporation
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4.28
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Royal Gold, Inc.
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3.83
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New Gold Inc.
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3.74
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IAMGOLD Corporation
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3.16
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Harmony Gold Mining Company Limited
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2.85
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Pan American Silver Corp.
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2.09
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Allied Nevada Gold Corp
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1.98
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First Majestic Silver Corp
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1.72
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AuRico Gold Inc.
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1.69
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Coeur D’alene Mines Corporation
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1.61
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Hecla Mining Company
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1.22
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Silver Standard Resources Inc.
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0.88
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Nevsun Resources Ltd.
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0.62
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Seabridge Gold Inc.
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0.59
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Aurizon Mines Ltd.
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0.42
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Golden Star Resources Ltd.
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0.35
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Tanzanian Royalty Exploration Corporation
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0.32
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Vista Gold Corp.
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0.16
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*
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Rounded to two decimal places
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Accelerated Return Notes
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TS-9
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Accelerated Return Notes
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Linked to the NYSE Arca Gold Miners Index, due March , 2014
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The following graph shows the monthly historical performance of the Index in the period from January 2007
through December 2012. We obtained this historical data from Bloomberg L.P. We have not independently verified the accuracy or completeness of the information obtained from Bloomberg L.P. On December 31, 2012, the closing level of the Index was
1,288.22.
This historical data on the Index is not necessarily indicative of the future performance of the Index or what the value
of the notes may be. Any historical upward or downward trend in the level of the Index during any period set forth above is not an indication that the level of the Index is more or less likely to increase or decrease at any time over the term of the
notes.
Before investing in the notes, you should consult publicly available sources for the levels and trading pattern of the Index.
License Agreement
NYSE Arca and MLPF&S have
entered into a non-exclusive license agreement providing for the license to MLPF&S, in exchange for a fee, of the right to use the Index in connection with this offering. We will, prior to the pricing date for the notes, enter into a sublicense
agreement with MLPF&S with respect to the Index. The license agreement between NYSE Arca and MLPF&S provides that the following language must be stated in this term sheet:
“NYSE Arca Gold Miners Index” is a service mark of NYSE Euronext or its affiliates (“NYSE Euronext”) and is being used with the
permission of NYSE Euronext. NYSE Euronext in no way sponsors, endorses, or is otherwise involved in the transactions specified and described in this document (“Transaction”). NYSE Euronext makes no representations or warranties regarding
Barclays or the ability of the NYSE Arca Gold Miners Index to track general stock market performance.
NYSE EURONEXT MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE NYSE ARCA GOLD MINERS INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL NYSE EURONEXT HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
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Accelerated Return Notes
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TS-10
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Accelerated Return Notes
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Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Supplement to the Plan of Distribution
We may deliver the notes against payment therefor in New York, New York on a date that is greater than three business days following the pricing date. Under Rule 15c6-1 of the Securities Exchange Act of 1934,
trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, if the initial settlement of the notes occurs more than three business days from the
pricing date, purchasers who wish to trade the notes more than three business days prior to the original issue date will be required to specify alternative settlement arrangements to prevent a failed settlement.
The notes will not be listed on any securities exchange. In the original offering of the notes, the notes will be sold in minimum investment amounts of 100 units.
MLPF&S will not receive an underwriting discount for notes sold to certain fee-based trusts and fee-based discretionary accounts managed by U.S.
Trust operating through Bank of America, N.A.
If you place an order to purchase the notes, you are consenting to MLPF&S acting as a principal in
effecting the transaction for your account.
MLPF&S may repurchase and resell the notes, with repurchases and resales being made at prices related
to then-prevailing market prices or at negotiated prices. MLPF&S may act as principal or agent in these market-making transactions; however it is not obligated to engage in any such transactions.
The distribution of the Note Prospectus in connection with these offers or sales will be solely for the purpose of providing investors with the description of the
terms of the notes that was made available to investors in connection with their initial offering. Secondary market investors should not, and will not be authorized to, rely on the Note Prospectus for information regarding Barclays or for any
purpose other than that described in the immediately preceding sentence.
Role of MLPF&S
Under our distribution agreement with MLPF&S, MLPF&S will purchase the notes from us as principal at the public offering price indicated on the cover of
this term sheet, less the indicated underwriting discount. The public offering price includes, in addition to the underwriting discount, a charge of approximately $0.075 per unit, reflecting an estimated profit earned by MLPF&S from transactions
through which the notes are structured and resulting obligations hedged. Actual profits or losses from these hedging transactions may be more or less than this amount. In entering into the hedging arrangements for the notes, we seek competitive
terms and may enter into hedging transactions with MLPF&S or one of its subsidiaries or affiliates.
All charges related to the notes, including the
underwriting discount and the hedging related costs and charges, reduce the economic terms of the notes. For further information regarding these charges, our trading and hedging activities and conflicts of interest, see “Risk Factors —
General Risks Relating to ARNs” beginning on page S-10 and “Use of Proceeds” on page S-21 of product supplement ARN-1.
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Accelerated Return Notes
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TS-11
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Accelerated Return Notes
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Linked to the NYSE Arca Gold Miners Index, due March , 2014
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Material U.S. Federal Income Tax Consequences
Except as noted under “Non-U.S. Holders” below, this section applies to you only if you are a U.S. holder (as defined in product supplement ARN-1) and you
hold your notes as capital assets for tax purposes and does not apply to you if you are a member of a class of holders subject to special rules or are otherwise excluded from the discussion in product supplement ARN-1 (for example, if you did not
purchase your notes in the initial issuance of the notes).
There is no judicial or administrative authority discussing how your notes should be treated
for U.S. federal income tax purposes. Pursuant to the terms of the notes, you agree with us, in the absence of a change in law or an administrative or judicial ruling to the contrary, to characterize your notes as a pre-paid cash-settled executory
contract with respect to the Index. If your notes are so treated, you should generally recognize capital gain or loss upon the sale or maturity of your notes in an amount equal to the difference between the amount you receive at such time and the
amount you paid for your notes. Such gain or loss should generally be long-term capital gain or loss if you have held your notes for more than one year.
In the opinion of our special tax counsel, Sullivan & Cromwell LLP, the notes should be treated in the manner described above. No assurance can be given
that the Internal Revenue Service or any court will agree with this characterization and tax treatment. There are other possible treatments that are described in a detailed discussion of tax considerations under the section entitled “U.S.
Federal Income Tax Summary” beginning on page S-35 of product supplement ARN-1 and one or more of these might ultimately govern the tax treatment of the notes.
You should consult your tax advisor concerning the U.S. federal income tax and other tax consequences of your investment in the notes in your particular circumstances, including the application of state, local or
other tax laws and the possible effects of changes in federal or other tax laws.
Non-U.S. Holders.
The Treasury Department has issued proposed
regulations under Section 871(m) of the Internal Revenue Code which could ultimately require us to treat all or a portion of any payment in respect of your notes as a “dividend equivalent” payment that is subject to withholding tax at
a rate of 30% (or a lower rate under an applicable treaty). You could also be required to make certain certifications in order to avoid or minimize such withholding obligations, and you could be subject to withholding (subject to your potential
right to claim a refund from the Internal Revenue Service) if such certifications were not received or were not satisfactory. You should consult your tax advisor concerning the potential application of these regulations to payments you receive with
respect to the notes when these regulations are finalized.
Where You Can Find More Information
We have filed a registration statement (including a product supplement, a prospectus supplement, and a prospectus) with the SEC for the offering to which this term
sheet relates. Before you invest, you should read the Note Prospectus, including this term sheet, and the other documents that we have filed with the SEC, for more complete information about us and this offering. You may get these documents without
cost by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, we, any agent, or any dealer participating in this offering will arrange to send you these documents if you so request by calling MLPF&S toll-free at 1-866-500-5408.
Market-Linked Investments Classification
MLPF&S classifies certain market-linked investments (the “Market-Linked Investments”) into categories, each
with different investment characteristics. The following description is meant solely for informational purposes and is not intended to represent any particular Enhanced Return Market-Linked Investment or guarantee any performance.
Enhanced Return Market-Linked Investments are short- to medium-term investments that offer you a way to enhance exposure to a particular market view without taking
on a similarly enhanced level of market downside risk. They can be especially effective in a flat to moderately positive market (or, in the case of bearish investments, a flat to moderately negative market). In exchange for the potential to receive
better-than market returns on the linked asset, you must generally accept market downside risk and capped upside potential. As these investments are not market downside protected, and do not assure full repayment of principal at maturity, you need
to be prepared for the possibility that you may lose all or part of your investment.
“Accelerated Return Notes
®
” and “ARNs
®
” are registered service marks of Bank of America Corporation, the parent company of MLPF&S.
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Accelerated Return Notes
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TS-12
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